First grad class from startup incubator set to pursue bigger funding rounds

Rob Lewis6 years ago

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Every week Techvibes republishes an article from Business in Vancouver. This article was originally published in issue #1058 – Feb. 2 – 8, 2010.

Having invested and helped develop five new companies in its first year of business, an experimental startup-accelerator and seed fund based in Vancouver has invested in six additional digital media enterprises.

The five companies in Bootup Labs Inc.’s 2009 cohort are now being sent out to go it alone.

If they continue at the trajectory they’ve been on in the last year, at least a few will be attempting to raise their first major rounds of angel or venture capital in the coming months. That would be a major validation of Bootup Labs’ mentoring model, which is unique among B.C.’s investment community.

Bootup, which raises a $2 million fund annually, was founded to help fill the investment gap that leaves the earliest-stage startups with little financing and few support mechanisms.

While venture capitalists and other fund managers typically charge management fees, Bootup has structured its fund in a way that provides its founders with salaries but doesn’t cost investors.

It’s also unique in that Bootup is extremely hands-on with its investments, working daily with them in its communal development space.

“[Bootup] is really a testing ground for a lot of ideas,” said Danny Robinson, a Bootup co-founder.

“All of our five companies [from the 2009 cohort] are gaining a huge amount of momentum … they think they’re going to turn into really good going concerns for the city.”

OverInteractive Media Inc., which has spent the last eight months with Bootup developing a web platform that allows video-game developers to self-publish games across a number of social media networks, is trying to raise between $250,000 and $400,000.

It and other Bootup-affiliated companies pitched investors at an event in Vancouver last week and will be doing the same in San Francisco in March.

If OverInteractive can close its round and continue to scale its prototype platform, it will look to raise a $2 million to $5 million venture capital round as early as July to ramp up marketing and brand development.

Jason Joly, a co-founder and CCO of OverInteractive, said that being involved with Bootup helped validate OverIntractive’s model and accelerated development of its platform. Consequently, the company was able to raise a $200,000 round while in the Bootup cycle.

Letsgofordinner.com, another member of Bootup’s class of 2009, has developed a website where consumers can sign up to receive discounts to restaurants.

It’s attempting to raise $1 million to expand from the Vancouver market into five other cities in North America. It has signed up 25 restaurants and expects to add another 25 in the next six weeks.

Letsgo CEO Craig Baker had been tinkering with the company’s model for years, but couldn’t get much traction with it.

He applied to Bootup for help rebuilding the model.

“We were at a critical point where we needed to restart the model from the beginning and have an environment where we could do that,” said Baker.

The company has since developed more complex intellectual property for the website that matches consumers’ culinary tastes, diet and location to restaurants that are offering timely deals.

“It’s really tough to do that without any guidance, without any place for everyone to meet and, of course, without raising some cash,” said Baker.

In exchange for a 5% to 15% equity stake in their operations, companies that join Bootup get a $150,000 line of credit – $50,000 of which covers rent, web hosting, Bootup founders’ salaries and other expenses. Baker said Bootup’s share and fee structure is more than fair.

“There’s [investors] in this city that are looking for three times that for 10% of what is offered here. It’s not just a service, you’re part of family. It’s nurturing. They kick you in the ass.”

Baker expects Letsgo to be profitable within 18 months. The company’s biggest expense in the coming months will be the legwork required to recruit more restaurants.

With its newest cohort, which moved into its new Gastown digs last month, Bootup has accomplished a rare feat: it has imported two foreign startups, one from Phoenix and another from Romania, into B.C.

In B.C., companies more often leave the province for more conducive pastures in the Silicon Valley and elsewhere.

“We have to start building [B.C.’s] reputation as a producer of world-class web startups,” said Robinson.

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